Music streaming services like Spotify have become an important source of revenue for artists and musicians in recent years. However, understanding how the payment process works can be complicated, as it involves multiple parties including music distributors, rights holders, and Spotify itself. To provide a clearer picture, this article will delve into the specifics of how artists are paid by Spotify through music distributors, explaining how royalties are collected and distributed, and highlighting the role of rights holders in the process.
Since it’s so attractive to musicians and consumers alike, it’s easy to think that the artist getting millions of Spotify streams per track must be making a lot of money. So you wonder, how much does Spotify pay per stream? The answer might actually surprise you.
How Much Does Spotify Pay Per Stream?
Before anything, Spotify, to this day, has not disclosed any details on how much it pays its artists. But one thing that needs clarification; there is no such thing as a Spotify stream pay because it doesn’t pay artists per stream, per se. Instead, it is computed based on a streamshare model, which we will discuss later in this article.
Nonetheless, some insiders have estimated its payout average comes down to $0.004 per stream, which many find to be a “nothing burger” compared to physical tracks and album sales. While getting thousands of streams won’t be enough to sustain a musical career, reaching millions will.
How Much Does Spotify Pay Per 1000 Streams?
Using the $0.004 per stream average, for every thousand streams, you’ll get $4, which equates to $4000 for every million. So if your streaming is in the millions, it becomes a decent income stream.
But that means your streams should always reach a million and above every month. So when your streams plateau, people aren’t listening much to your music; therefore, you won’t get paid anymore.
Meanwhile, generating consistent Spotify streams in tens and hundreds of millions can become lucrative. Here are the top 5 artists with the most streams (and the highest estimated earnings).
Calculating Spotify Per Stream Rate
In the same way that many algorithms are closely guarded secrets, Spotify’s payment model is no different. Spotify’s website does not offer any of these numbers clarifying how much does Spotify pay, but if you’re a musician, you can still use a Spotify stream calculator to help you estimate how much you might earn.
Giving a verdict, it is evident that you can’t wholly rely on Spotify for your earnings with these rates. It can only be considered a side job.
You may earn the following as an artist, according to the stats mentioned above:
|No. Of songs
Spotify payouts vs other platforms
|Ave payout per stream
|Estimated no. of streams to earn $1000
As seen above, Peloton (yes, that exercise bike company) is the most generous among the music streaming platforms, paying as much as $30 per 1,000 streams. However, it has less than 6 million Peloton members, with only 874,000 plus paying subscribers. And they are not set up as on-demand streaming; instead, Peloton has its curated streaming catalog. Hence, their payout contributions, although they are the highest per stream by comparison, are not exactly groundbreaking after all.
Apple Music pays the highest among the top 3 streaming services with the most users and subscribers, with Spotify and Amazon Music having similar average payouts at $4 per 1,000 streams. Your Spotify music needs to reach 250,000 streams to break a thousand-dollar payout. Yet despite the seemingly low pay per stream, artists would still aim to be on the Spotify platform since it has the widest reach.
Although you’ve now seen its market dominance has shrunk slightly, Spotify remains the world’s top audio streaming subscription service. Now you’ve seen how much does Spotify pay you might want to disregard the platform. But remember it boasts 456 million plus users, nearly half of which are paying subscribers, hosting almost all the major musicians and megastars in the industry. So it would seem strange not to be on Spotify if you’re an artist.
How do artists get paid by Spotify?
Artists are usually paid in the form of royalties whenever their music is played in various media. This is also how they make money from Spotify streams. In 2021, Spotify paid over 7 billion dollars in royalties. However, Spotify does not directly pay the artist. Instead, the distributor collects the royalties each month and distributes them to everyone involved, such as the rights holders (record label, songwriter, etc.).
So if Spotify pays $4 per thousand streams, only a portion of it will go to the artist, which could be a dollar per thousand. That’s how much Spotify pays per stream on an informal basis. Not quite the big payday many are anticipating, but again, if your music has made such a huge impact on listeners, it can generate millions of streams monthly. Although you will need a lot of work to achieve that, once you do, you can make a good living out of your music on Spotify.
To get a clearer picture of how much does Spotify pay its artists, here are the likely factors that impact artist income from Spotify.
A streamshare model is a system used by Spotify to determine the payment made to artists for their music streams. Instead of paying artists per stream, the payments are based on the artist’s share of the total streams in a specific region or country, also known as the royalty pool. Some however, think Spotify should change the way it pays artists.
This share is calculated based on the number of streams the artist’s music received compared to the total number of streams in the region. For example, if the total number of Spotify streams in a region is 100 million and the artist received 100,000 streams, their streamshare would be 0.1% and they would receive a portion of the royalty pool proportional to their streamshare.
A stream gets counted if you listen to the music for at least 30 seconds. It forms part of Spotify’s total streams by region or country, also called the Royalty pool, which is computed monthly. For instance, if the total Spotify streams in Sweden is 100 million, including your own 100,000 streams, your streamshare is 0.1%. Thus, Spotify does not technically pay per stream but by streamshare per country.
Country or region
You will notice that Spotify premium subscription fees vary by country. US users pay $9.99 per month, which is three times higher than what users in the Philippines pay at roughly $3. Including ad revenues from the free-tier option, the resulting amount will be the basis of your royalty computation. So you are essentially paying Justin Bieber even if you’re not streaming his songs as a Spotify premium subscriber. Note that 30% of the total proceeds go to Spotify, leaving 70% divided among the rights holders.
When a listener streams the artist’s music on Spotify, the platform pays a royalty to the distributor. The distributor then collects all the royalties from various streaming platforms and consolidates them. The distributor then distributes the royalties to the rights holders based on the distribution agreement. This typically involves deducting a fee for their services and then distributing the remaining royalties to the rights holders.
Your deal with your record label or music distributor can also affect your net proceeds as an artist. Some collect a small percentage of your song’s royalties, while others charge a yearly fee or a predetermined amount per single or album. In any case, it will impact your earnings; hence you should pay attention to this when considering which label to work with.
In conclusion, understanding the payment system for artists on Spotify is important for musicians and rights holders to properly collect their royalties. By partnering with a reliable music distributor, artists can ensure that their royalties are accurately calculated and efficiently collected. Besides the traditional royalty system, buying Spotify plays can also help increase an artist’s visibility on the platform and ultimately drive more streams and revenue. By investing in Spotify plays, artists can reach a wider audience and reap the benefits of increased exposure and a boosted revenue stream.
Now you know the answer to the question “how much does Spotify pay per stream”, start rolling up your sleeves and promote your music. While there is no Spotify pay-per-stream, but by streamshare, the amount will translate to an average of $4 per 1,000 streams. It seems very little, but you can earn a decent living once your song takes off. Moreover, you establish your artist brand to a wider audience, which can open even more opportunities for you outside the platform to make an incredible amount of money.